You Think Gold’s been doing Bad, Check out Gold Miners…

What’s the only thing worse than being long gold as it plunged 12% since June 1st? Being long a gold mining company who has massive exposure to the plunging gold price, as well as some added extra exposure in terms of the company’s management, fixed costs, debt, and so on… to wit — The Gold Miners ETF (GDX) is underperforming by -62% when comparing it to Gold Futures. GDX lost more than half of its value (-52%) since this time in 2008. SPDR Trust (GLD) has still made substantial gains since 2008, but down -18% since this time last year, and the December 2013 Gold futures down -18% in the same period.

Now, we actually think the GLD ETF is one of the only acceptable commodity ETFs, because it invests in the actual commodity (it holds gold in a vault), thus doesn’t have a problem with negative roll yields like CORN, UNG, or USO do. But this performance discrepancy highlights a problem we didn’t really touch on in our commodity ETF takedown – which is that there exists even worse products, commodity producer/miner ETFs.

Just look at the performance of these commodity producer/miner ETFs versus the commodity ETFs versus the actual commodity itself.

In Gold…

(Disclaimer: Past performance is not necessarily indicative to future results)

And when looking at a basket of commodities:

(Disclaimer: Past performance is not necessarily indicative to future results)

As a whole, the CBRQ market is underperforming by around -10% when compared to CCI. Now, sure – we suppose there is an argument that a company, via debt, leverage, management skill, and so forth – could outperform the raw commodity they produce in a sort of wholesale model where they procure it for cheap, then sell it for a profit. There is sure something to be said for pulling some Gold out of the ground for “free” then selling it at $1,200 per ounce, or Oil and selling it for $90 per barrel. Problem is, it isn’t really “free”. Those big Caterpillar trucks probably run a few million, and a new deepwater oil drilling rig will run you about $250k to $430k per day according to RigZone.com.

But there are also so many negatives that come with owning all the other stuff that comes with a commodity company. It’s hard enough to trade commodities successfully, without having to worry about company problems in addition to prices. We prefer tactical exposure to commodities via Ag trading CTAs.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

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DISCLAIMERS

Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. You should not rely on any of the information herein as a substitute for the exercise of your own skill and judgment in making such a decision on the appropriateness of such investments. Any mention of ‘funds’ within this site encompasses both privately offered fund and separately managed account investments.

Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA. Use the following links to view the full terms of use and risk disclaimer and our privacy policy.